For example, if you think you can make $35K post rehab if everything goes perfectly and you get the price you believe you will get, then getting $30K for a quick as-is sale (more than likely to an end user) makes more sense and takes away the risk of unexpected problems during rehab and/or the appraisal issues I mention. 

Perfect.

They will help you learn how to do it the legal way! 

As I explained to them, between acquisition costs (their home alone is worth 500K on the market, not including the lot next door), permits, fees, holding costs, the cost of tearing down their perfectly good home, and then adding in the cost to build 4 new units it just doesn't seem like it would pencil out.

Wait until they show up with contract in hand, otherwise take the free publicity of the property.Just my 2 cents and not legal advice.

Generally speaking all parties with an interest in the property have to either agree on what to do or take legal action to force things to happen.

Fortunately, one of my partners in that venture is a lawyer and she helped figure out the legal ramifications. 

I was told Legal Zoom could, however since my LLC has already been opened.

Its zoned as a single family home and has everything necessary to be a legal accessory as far as the city goes, but there are a few problems with the HOA.This is what the HOA has to say about renting out part of the home. 

The house, even in perfect condition and with a working HVAC, is probably only worth about $70K.Resale is the best reason I can think of for "maybe" biting the bullet.